Avalara, a cloud-based tax and compliance automation technology provider, has offered five specific tips to help European broadcasting, telecommunications and electronic services (BTE) companies address imminent VAT changes when supplying to EU consumers.
Currently, if these services are purchased in the EU, they are subject to VAT in the country where the supplier is established. However, changes to the EU VAT Place of Supply Rules, due to come into effect from 1st January 2015, mean that multinationals will become responsible for charging VAT in the countries where their customers reside.
Despite plans by the European Commission to minimise disruption by allowing VAT filings in a single EU tax authority, Avalara recognises these changes could potentially present logistical and cost management complexities for BTE retailers involved in cross-border trading across the EU’s 28 member states.
5 Tips to Help Merchants Minimise Potential Disruptions from 2015 VAT Changes
1. Know your thresholds and obligations – Different EU member states have different turnover thresholds after which you must register to collect VAT. If you need to register, you are also obligated to provide certain additional information on your invoices.
2. Be prepared – The prepared business will be the successful business. The key is to learn how these changes will affect you before they happen and avoid getting caught out.
3. Tackle VAT head on – VAT is a necessity in EU trading, but it’s not something that should be a hindrance to business. Look for automated tax calculations that offer a fast, easy, accurate option, letting you concentrate on your core business objectives.
4. Ensure your tax-management is scalable and affordable – Manual systems might work for a small business in a single territory but wider growth will present additional taxation complexities and you need to ensure you can grow with it.
5. Ask the experts – The new tax laws can be daunting for cross-border digital retailers, but don’t be afraid to ask for guidance and advice on successfully managing VAT across multiple territories.
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